Intellectual Property &Private International Law

Subject Matter / Exclusive Jurisdiction

© T. Kono / P. Jurčys

IP & PIL 2

Class Date Subject

1 15 Oct* Introductory Lecture

2 22 Oct Territoriality, National Treatment, Personal Jurisdiction

3 29 Oct Jurisdiction: Infringements of IPRs

4 5 Nov Exclusive / Subject-Matter Jurisdiction5 12 Nov RM Injunctions, Jurisdiction in Contract-related Matters,

Choice of Court Agreements

6 19 Nov** RM Applicable Law: Territoriality Principle

7 24 Nov* RM Law Applicable to Initial Title

8 26 Nov* RM Infringement of IP Rights

9 3 Dec (moot) Contracts for the Exploitation of IPRs

10 10 Dec Multiple Parties in IP Disputes/Consolidation

11 17 Dec* BU Parallel Proceedings, Custom Measures,

12 21 Dec* BU Arbitration, Security rights

13 7 Jan BU Recognition and Enforcement

14 14 Jan Cross-Border Exploitation of IPRs: Current Issues

15 Review & Preparation for the Exam11/5/12

JURISDICTION: ENTITLEMENT AND OWNERSHIP

IP & PIL 4

ENTITLEMENT AND OWNERSHIP: Jurisdiction

1. Who is initial / first owner?• 3 authors jointly write a book: who is the first

author? • Inventor vs third party (competitor/applicant for

a patent)• Employee inventions: employer or employee?

2. Statutory provisions for automatic transfer of IPRs

3. Contractual transfer (assignment) of IPRs

11/5/12

IP & PIL 5

ENTITLEMENT AND OWNERSHIP:Duijnstee v Goderbauer

11/5/12

INSOVENCYADMINISTRAT

OR

INVENTOR (EMPLOYEE and EX-MANAGER)

PATENTS IN 22 EUROPEAN STATES

TRANSFER OF COMPANY’S PATENTS TO

INSOLVENCY ESTATE

CAN A DUTCH COURT HEAR A CASE?Jurisdiction…

IP & PIL 6

ENTITLEMENT AND OWNERSHIP:Duijnstee v Goderbauer

Where to sue under the Brussels I Regulation?

Defendant’s domicile (general rule)Exclusive jurisdiction (Art 22(4)):

‘Proceedings concerned with the registration or validity of patents’

Employment contracts: employee can sue• In the place where the employer is established• Where the employee habitually carries out his

work

Choice of court agreement? 11/5/12

IP & PIL 7

ENTITLEMENT AND OWNERSHIP:Duijnstee v Goderbauer

• ‘Proceedings concerned with the registration or validity of patents’ Autonomous interpretation Narrow interpretation (exception of a general rule)Only registration and validity Entitlement to grant / ownership matters not covered by art 22(4) of the Brussels I Regulation

11/5/12

IP & PIL 8

ENTITLEMENT AND OWNERSHIP: CLIP approach

A rule of special jurisdiction was proposed:

Article 2:205: Entitlement and ownershipAs regards entitlement to and ownership of an IP right, the State where the right exists or for which an application is pending shall also have jurisdiction.

11/5/12

IP & PIL 9

JURISDICTION AND OWNERSHIP: Common law countries

• UK law does not contain any specific ground for disputes concerning entitlement or ownership

• How would these matters be addressed? subject-matter jurisdiction limitations extend to

cases concerning entitlement and ownership[In the UK: What is actual situation after Lucasfilm?]

11/5/12

IP & PIL 10

SUBJECT-MATTER/EXCLUSIVE JURISDICTION

11/5/12

Hypothetical 1: Subject-Matter Jurisdiction

A court is dealing with a dispute between A and B concerning an infringement of a foreign patent issued in country Y. During the course of infringement proceedings, B makes a counter-claim that the patent is invalid. 1) Would a court have international jurisdiction and would it decide the question of the infringement of foreign IPRs?2) Would a court have international jurisdiction to decide upon the issues of validity (and registration) of foreign IPRs? If so, what would be the legal effects (inter partes or erga omnes) of such a decision? Would the decision differ with regard to registered and non-registered IPRs?3) What would be the decision of a court if the question of the validity of a foreign IPR arose as a preliminary question and remained unchallenged by the parties?11/5/12 IP & PIL 11

11/5/12 IP & PIL 12

Production in Thailand; Export to Japan Proceedings in a Thai CourtInfringement of a Japanese Patent Defendant’s Domicile & assets in ThailandInfringement / validity of Japanese Patent

IP & PIL 13

TERRITORIAL IPRS

NATIONAL

TREATMENT

INTERNATIONAL

JURISDICTION

11/5/12

IP & PIL 14

National treatment & territorial IPRs:implications to PIL (jurisdiction)

• PIL: search for connecting factorsDefendant’s domicile Special connecting factors

• Place of performance • Place of tort/damage

• National treatment IP rights – immaterial: less/no connection to assetsForeign authors ＝ national authorsForeign authors as national plaintiffs

• Territoriality of IPRs – a factual consequence of national treatmentMore as a principle, less a rule

11/5/12

IP & PIL 15

EXCLUSIVE JURISDICTION: Validity, registration and other matters

• ‘Pure’ IP infringement cases • Cases where validity is the main issue• Validity issues may also arise in:– As a defence in infringement proceedings– A case for declaration of non-infringement– Separate revocation proceedings in another state

• Existence/validity of IPRs as a preliminary matter• Substantive law in practice ‘two sides of the same

coin’:‘Gillette defence’: ‘if the patent is wide enough to cover what I do, then the patent is invalid’The court has to decide on (1) the scope and (2) validity

11/5/12

IP & PIL 16

EXCLUSIVE JURISDICTION: Validity, registration and other matters

• Should infringement and validity issues be heard in the same proceedings?

• Policies or efficiency? (Stakeholders: States, IPR holders, communities…?)

11/5/12

IP & PIL 17

Subject-matter / exclusive jurisdiction: two legal traditions

Common-law countries

• In personam jurisdiction

• Subject-matter jurisdiction

Civil law countries

• General rule (domicile)

• Special jurisdiction rules

• Exclusive jurisdiction

11/5/12

What legal arguments could justify the existence of

subject-matter / exclusive jurisdiction?

IP & PIL 18

JURISDICTION:HISTORICAL BACKGROUND

11/5/12

IP & PIL 19

JURISDICTION (common law countries): Moçambique rule

• Historical BackgroundLocal actions: where facts are related to a particular place (eg land-related claims)Transitory actions: no necessary connection to certain place (eg breach of contract)

• Moçambique case (1893): Action between two British over a land in Mozambique

• Do English courts have Jurisdiction?: 1. Issues related to title: no jurisdiction because the court would

not have power to ensure the execution of the judgment 2. Issues related to trespass to foreign land can be adjudicated

and damages may be awarded (BUT local venue must exist)11/5/12

IP & PIL 20

JURISDICTION: PATENTSPotter v Broken Hill

• Potter: an Englishman who moved to Victoria

• In 1901 Potter created many inventions, including a chemical process to separate sulphide ores from valuable metals

• This invention is used until now in mining industry – ‘Delprat-Potter flotation process’

• Patents in New South Wales and Victoria At that time: separate state registrations of patents

11/5/12

IP & PIL 21

JURISDICTION: PATENTSPotter v Broken Hill

• In 1902 Potter met a manager of Broken Hill, who later patented a very similar process

• Potter sued Broken Hill in Victoria (defendant’s domicile): 1. Injunction to restrain from infringing of patent in NSW2. Infringement of patents in Victoria and NSW3. Compensation for damages

• Broken Hill argued that patents are invalid and that the NSW patent is not justiciable in Victoria

• Court decision: Australian states as foreign nationsAdoption of the Moçambique rule: Foreign IPR claims not justiciable & ‘act of state’ doctrine

11/5/12

IP & PIL 22

JURISDICTION: PATENTSAfter Potter v Broken Hill

‘unfortunate orthodoxy’ ?

What about non-registered IPRs (copyrights/ neighbouring rights)?No formalities of registration (Art 5(2) Berne)

11/5/12

IP & PIL 23

THE LAW IN THE US

11/5/12

Jurisdiction & infringement of copyrights: Subafilms

• Beatles, represented by Subafilms, agreed with Hearst to make animated movie of ‘Yellow submarine’

• Many financing agreements were concluded with third parties

• Rights were granted for showing the cartoon (only) in theatres and on TV

• From 1980 – Warner produced video cassettes and distributed in the US and abroad

• Subafilms and Hearst sued Warner and its subsidiaries for monetary relief for damage which occurred in the US and abroad by selling video-cassettes

• US Court decided only on compensation for damages in the US

• (claims related to foreign IPRs are not actionable no subject-matter jurisdiction)11/5/12 IP & PIL 24

IP & PIL 25

CONSOLIDATION IN THE US: Voda v Cordis Corp 476 F 3d 887 (Fed Cir

2007). • Voda was a proprietor of a

number of EPC patents in the US, Canada and Europe

• Cordis was a US-based corporation established in Florida (affiliates in France, Germany, Italy, and the Netherlands)

• Voda filed a patent infringement action in the US claiming also infringements of US and foreign patents

• District court accepted jurisdiction

• Reversed decision by the Federal Circuit Court:

• No supplemental jurisdiction (section 1367)

• Comity considerations • The US courts have no

duty under international law to hear foreign IP claims

11/5/12

IP & PIL 26

THE LAW IN THE EU

11/5/12

EXCLUSIVE JURISDICTION: EUBrussels I Regulation

• Art 2: ‘defendants domicile’• Art 22(4) exclusive jurisdiction

proceedings concerning registration or validity of registered IP rights can be brought only before the courts of the country where the right in question is registered

• Art 22(4): other circumstances (eg domicile, location of property etc) do not matter

• Only registered IPRs (patents, TMs, designs)• The reason behind: sovereignty of states

(validity of public acts)11/5/12 IP & PIL 27

IP & PIL 28

EXCLUSIVE JURISDICTION: EU

• German law: ‘2-track system’Infringement cases ordinary courts (invalidity defence not possible!)(In)validity claims Federal patent court (Munich)Infringement court can stay proceedings and way for the decision of a dispute on validity

11/5/12

EXCLUSIVE JURISDICTION (EU): Gat v Luk

11/5/12 IP & PIL 29

GAT and LuK were German companies (car manufacturing)

GAT supplied

some parts to Ford (in

France)

Proceedings in Germany (Art 2): GAT sought declaration of non-

infringement argument: French patents are invalid

ECJ: patent cases are very complex- Validity questions (main issue or as a

defence) Art 22(4) applies- Legal certainty

After GAT v LuK

Supporters

• UK authors: GAT v LuK is in line with the common-law practice

• GAT v LuK maintains legal certainty

Criticism• GAT v LuK is contrary

to the ECJ Practice Jurisdiction depends on whether the claim on invalidity is raised

• European Patent Rights (EPC)

• Abuse of process• Expensive litigation

– Possible solution?!

11/5/12 IP & PIL 30

IP & PIL 31

RECENT JAPANESE COURT PRACTICE

11/5/12

Exclusive jurisdiction in Japan: ‘Coral Sand’ case(1)

Plaintiff: JP producer of ‘coral sand’Defendant: JP company having a US patentPlaintiff exported and sold through a distributor ‘coral sand’ in the USDefendant issued warning letters to the Japanese producer and the US distributorJP producer filed an action for a negative declaratory judgment

Defendant has no right to seek injunctionUS patent is not validWarning letters acts of unfair competition

Defendant:JP courts have no jurisdiction (territoriality of IPRs)Plaintiff’s claim should be dismissed

11/5/12 IP & PIL 32

EXCLUSIVE JURISDICTION IN JAPAN: ‘Coral Sand’ case (2)

COURT DECISION• Defendant’s domicile (Art 4(4) CCP)• No special circumstances• ‘the principle of territoriality of patents means that the

grant, transfer, validity etc. of patent rights of each country is governed by the laws of that particular country. The validity and effects of a patent are to be recognized only within the territory of that country.’

• territoriality of patent rights - principle of substantive law nothing to do with jurisdiction

• If a Japanese court finds that US patent is invalid, it should not affect the continuation of the proceedings

• decision between the parties (inter partes)11/5/12 IP & PIL 33

IP & PIL 34

RECENT DEVELOPMENTS: LUCASFILM V AINSWORTH AND LEGISLATIVE

PROPOSALS

11/5/12

IP & PIL 35

Lucasfilm vs. Ainsworth [2011]UKSC39

11/5/12

IP & PIL 3611/5/12

IP & PIL 37

SUBJECT-MATTER JURISDICTIONLucasfilm v Ainsworth: Facts

Mr Lucas created characters for Star Wars50 helmets made by Mr AinsworthAll events took place in England Three plaintiffs (2 Californian and 1 English corporations owned by Lucas)Defendant (Ainsworth) in EnglandInfringement of US copyrightsQuestions:

1. Justiciability of foreign copyright claims?2. Jurisdiction according to Art 2 Brussels I?

Court of Appeals:3. Non-justiciable (Mocambique rule)4. No obligation to assert jurisdiction

according to Art211/5/12

IP & PIL 38

SUBJECT-MATTER JURISDICTIONLucasfilm v Ainsworth: Decision

• Mocambique and Potter v Broken Hill rules: do not apply in the EU context (Arts 2 and 22(1) of the Brussels I)

• Double actionability rule (ie the claim must be actionable in the forum and in the state of act)abolished by 1995 PIL (Miscellaneous Provisions) Act

• Act of state doctrine: Developed by American courtsShould not be applied in copyright infringement cases

• Justiciability of foreign IPRs:Art 22(4)/GAT v LuK: only registered IPRsALI / CLIP PrinciplesNo policy issues involved in copyright infringement claims

Actions for infringement of foreign copyrights are justiciable if the court has jurisdiction in personam11/5/12

IP & PIL 39

Lucasfilm vs. Ainsworth (2)

Mr Ainsworth: the principle behind the Moçambique rule… still subsists and applies to claims for infringement of all foreign intellectual property rights, including copyright, because such claims are essentially “local” and must be brought in the place where the rights have been created, irrespective as to whether there is any claim to title.

The Supreme Court: in the case of a claim for infringement of copyright of the present kind, the claim is one over which the English court has jurisdiction, provided that there is a basis for in personam jurisdiction over the defendant, or, to put it differently, the claim is justiciable.

11/5/12

IP & PIL 40

Lucasfilm vs. Ainsworth (3)

The Court: There is no room for the application of the act of state doctrine in relation to copyright in this case, even if (contrary to the view expressed above) actions of officials involved with registration and grant of intellectual property rights were acts of state. The requirement to apply for copyright registration in the United States is limited to the “copyright in any United States work” which in practice means that published Page 37 works first published outside the United States are exempted from compliance with US registration provisions. In the present case the copyrights were treated as United States works and were registered. Registration is a pre-requisite to proceedings in the United States: United States Copyright Act, section 411. But the unchallenged evidence before the judge in this case was that registration was not a prerequisite to subsistence but only to suit, and it was possible to register at the time of suit. Consequently the provision is purely procedural.11/5/12

LEGISLATIVE PROPOSALS

§ 211. Subject-Matter Jurisdiction(1) Except as provided in subsection (2), a court is competent to adjudicate claims and defenses arising under foreign laws pertaining to copyrights, neighboring rights, patents, trade secrets, trademarks, related IPRs, and contracts that are related to any of these rights.(2) The adjudication of the validity of registered rights granted under the laws of another State is effective only to resolve the dispute among the parties to the action.

CLIP PrinciplesArt 2:401: Registration and invalidity(1) In disputes having as their object a judgment on the grant, registration, validity, abandonment or revocation of a patent, a mark, an industrial design or any other IPR protected on the basis of registration, the courts in the State where the right has been registered or is deemed to have been registered under the terms of an international Convention shall have exclusive jurisdiction.(2) Paragraph 1 does not apply where validity or registration arises in a context other than by principal claim or counterclaim. The decisions resulting from such disputes do not affect the validity or registration of those rights as against third parties. 11/5/12 IP & PIL 41